En­er­gy pol­i­cy and strat­e­gy ad­vis­er An­tho­ny Paul is ad­vis­ing that the first ob­jec­tive of pro­mot­ing a suc­cess­ful bid round for hy­dro­car­bon blocks is to de­vel­op and pro­mote a sto­ry that makes the blocks at­trac­tive, and to sup­port that with com­pelling tech­ni­cal da­ta, which po­ten­tial in­vestors can eval­u­ate in­de­pen­dent­ly.

Mean­while, Gre­go­ry McGuire, chair­man of the T&T Ex­trac­tive In­dus­tries Trans­paren­cy Ini­tia­tive (TTEITI), said the mere win­ning of a bid or the mere sign­ing of a pro­duc­tion shar­ing con­tract does not bring any im­me­di­ate re­turns for T&T.

Their com­ments came in wake of Mon­day’s an­nounce­ment by En­er­gy Min­is­ter Stu­art Young that T&T re­ceived six bids on four blocks from BP, Shell and EOG Re­sources in the 2023 shal­low wa­ter auc­tion to ex­plore for oil and gas.

This means, that nine of the 13 blocks did not re­ceive any in­ter­est as the bids came to a close.

BP, Shell and EOG Re­sources Trinidad Ltd were the on­ly com­pa­nies to bid on the blocks.

Paul, the chair­man of the Lloyd Best In­sti­tute of the Caribbean, led the min­istry’s bid rounds for sev­er­al years, dur­ing the 13 years and four months he was em­ployed at the Min­istry of En­er­gy. He is very fa­mil­iar with the process and the im­pli­ca­tions of the out­come of the bid rounds and on the way for­ward for T&T’s en­er­gy sec­tor.

Paul ex­plained that in­vestors in oil and gas ex­plo­ration and pro­duc­tion are first and fore­most in­cen­tivised by the na­ture of the blocks they are like­ly to en­counter.

“Noth­ing else is con­sid­ered if the ge­o­log­i­cal sto­ry is un­at­trac­tive. The first ob­jec­tive of pro­mot­ing a suc­cess­ful bid round is to de­vel­op and pro­mote a sto­ry that makes the rocks at­trac­tive, and to sup­port that with com­pelling tech­ni­cal da­ta, which po­ten­tial in­vestors can eval­u­ate in­de­pen­dent­ly.

“Com­pa­nies would need to have seis­mic and well da­ta from ad­join­ing acreage to make good de­ci­sions and com­mit fi­nance to drill wells. These are avail­able in abun­dance from seis­mic sur­veys and wells that have been drilled over 50 years ago,” Paul fur­ther ex­plained.

Un­for­tu­nate­ly, he said, this da­ta is not made avail­able to po­ten­tial in­vestors, be­cause of an out­dat­ed reg­u­la­tion and poor ne­go­ti­at­ing of li­cence re­newals.

“On­ly then would they be moved to con­sid­er whether the com­mer­cial en­vi­ron­ment makes in­vest­ing at­trac­tive and whether the po­lit­i­cal, reg­u­la­to­ry and so­cial con­di­tions al­low for a sus­tain­able busi­ness,” Paul added.

He not­ed that since the turn of the cen­tu­ry, T&T has been hav­ing bid rounds with­out flat­ter­ing re­sults. As a re­sult, the coun­ty has sought to im­prove the in­vest­ment cli­mate by amend­ments to the com­mer­cial terms avail­able to in­vestors.

Paul said fix­ing the fis­cal terms with­out ad­dress­ing the tech­ni­cal terms is putting the cart be­fore the horse, ex­cept for the in­cum­bents, who al­ready have the da­ta.

On the re­sults of the cur­rent bid round, Paul said while there are some red flags, specif­i­cal­ly on the num­ber and na­ture of the com­pa­nies bid­ding, he prefers not to com­ment on the qual­i­ty of ei­ther the process or the out­come, with­out an un­der­stand­ing of some per­ti­nent de­tails.

“These would in­clude not on­ly what was in the bids re­ceived, but al­so which com­pa­nies pur­chased the bid pack­ages or showed an in­ter­est by nom­i­nat­ing blocks they would like to see in a bid round. That will give an in­di­ca­tion of the kind of in­ter­est gen­er­at­ed in the process,” Paul added.

He said his un­der­stand­ing was that in the re­cent past, com­pa­nies have made of­fers that were be­low the min­i­mum re­quire­ment, adding that specif­i­cal­ly, where the min­istry would have man­dat­ed that a min­i­mum num­ber of wells must be drilled, bid­ders would have of­fered less than the min­i­mum and per­haps none at all.

For its part, Paul said the min­istry sees the need to drill wells as the on­ly way to prove re­serves, which is the pri­ma­ry ob­jec­tive of ex­plo­ration.

“That said, drilling is part of a se­quence of ac­tiv­i­ties and the min­istry does have in its ar­se­nal of reg­u­la­to­ry in­stru­ments, the abil­i­ty to of­fer li­cens­es to ex­plore us­ing ge­o­log­i­cal and geo­phys­i­cal stud­ies, with­out the need to drill wells.

“This can be use­ful in a sit­u­a­tion where a pre-drill risk needs to be mit­i­gat­ed by ge­o­log­i­cal and/or geo­phys­i­cal work,” Paul, a for­mer se­nior geo­physi­cist at Petrotrin sug­gest­ed.

He added that if the min­i­mum work com­mit­ments were not met in one or more of the bids in the cur­rent round, it would bring in­to ques­tion whether the min­istry’s un­der­stand­ing of the pe­tro­le­um po­ten­tial of the block was suf­fi­cient­ly con­vinc­ing, based on the in­for­ma­tion and “sto­ry” shared with po­ten­tial in­vestors.

Fur­ther, the for­mer pres­i­dent of the Ge­o­log­i­cal So­ci­ety of T&T said this al­so bring in­to ques­tion the mo­ti­va­tion and/or mes­sage of com­pa­nies of­fer­ing non-qual­i­fy­ing bids.

How­ev­er, Paul said he is of the be­lief that T&T has sig­nif­i­cant re­main­ing re­sources, both oil and gas, yet to be dis­cov­ered and/or as­sessed, adding that his hope is that re­main­ing changes re­quired will be ad­dressed in the near fu­ture, with an un­der­stand­ing of how in­vestors eval­u­ate, make de­ci­sions and act.

In shar­ing his in­sights re­gard­ing Young’s an­nounce­ment, McGuire, who is an econ­o­mist, said the time­frame from the award of a bid, to dis­cov­ery of hy­dro­car­bons to a pro­duc­tion shar­ing con­tract to fi­nal pro­duc­tion could be as much as ten to 15 years.

“I think this is very im­por­tant for peo­ple to un­der­stand that the mere re­lease of bids or the award of bids for blocks does not nec­es­sar­i­ly mean that there’s go­ing to be a big uptick in pro­duc­tion from to­mor­row or next year or any time soon,” he said.

How­ev­er, McGuire not­ed that the fact that there was in­ter­est for four of the 13 blocks is “noth­ing new.”

“If you look back at from 2004 to to­day, over 100 blocks have been of­fered for bid­ding in T&T and on­ly 34 have re­sult­ed in pro­duc­tion shar­ing con­tracts be­ing signed.

“That is a take up rate of 34 per cent. So that four out of 13 blocks is al­so about 30 per cent of the blocks be­ing tak­en up. In terms of re­ceiv­ing bids, there­fore that is noth­ing new. It is con­sis­tent with our re­cent his­to­ry,” he added.

On the bid­ders, McGuire said this has demon­strat­ed their con­fi­dence in find­ing new re­sources.

“They have cho­sen to sub­mit bids for acreage in Trinidad and I think that is very pos­i­tive. This is pos­i­tive be­cause these are shal­low-wa­ter blocks that are near­er to land and that, there­fore, are rel­a­tive­ly cheap­er to de­vel­op if hy­dro­car­bons are found. We have not had much suc­cess on land for a long while. Fur­ther­more, the area is a ma­ture province, so it is re­al­ly in­ter­est­ing that we do have in­ter­na­tion­al com­pa­nies that still have ex­pressed an in­ter­est in this,” McGuire added.